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Summary
- Sunwing takes emergency government loan as Covid cloud darkens.
- Company asked to minimize job cuts, share buy-backs, and limit dividend pay-outs.
- Canada scraps all holiday domestic and foreign travels.
Canada’s budget airline Sunwing will receive C$375 million in emergency loans to keep it afloat after the government announced new travel restrictions due to the rising number of Covid infections.
The company had begun talks for the funds last month after the Justin Trudeau government hinted at reintroducing some of the earlier restrictions adopted to curb the virus.
The company had planned to sell holiday packages to boost sales after months of disruptions, and incomes hit rock bottom. But hopes for a recovery faded away after the prime minister announced another round of ban on non-essential visits to Mexico and other holiday destinations.
The funds are being released to Sunwing Airlines Inc. and Sunwing Vacations Inc. under a federal loan facility to companies that are hit by the pandemic.
The two companies together employ nearly 3,000 employees.
@Kalkine Image 2021
Govt Steps Up Covid Testing
The Canadian government has stepped up its preventive measures after a new strain of the COVID-19 virus hit Canada and many other countries in Europe and North America in January.
According to an official estimate last week, more than 4,200 Canadians had fallen sick and some of whom have died. Provinces, such as Ontario, Toronto, and Quebec, where the new strain has been reported have also introduced respective restrictions on people’s movement.
Besides, those visiting Canada will be tested for Covid at the entry points and undergo a compulsory quarantine before they can head to their respective destinations.
These new measures have spelled doom for the aviation industry already reeling under the devastating impact of the pandemic for the past year.
As part of the deal, Sunwing had been asked to maintain a separate account to hold the customers’ money from travel cancelations, until the government and the industry work out a refund policy.
The government is providing the credit facility to companies under its Large Employer Emergency Financing Facility, called LEEFF, to help tide away from the immediate fund crunch. Companies were asked to minimize job cuts, limit dividend payouts, share buybacks. and executive pay, etc.
